Well, I'm stumped too. I can't think of any way a folder can disappear without user action.

Even LimeWire's "delete" button won't work on folders in the Library. It will work on files, but even then a "Are you sure . . . " dialog pops up.

For the record, could you post which LW version you were using? I'm assuming LW is working normally now, but if you could try to repeat the loss that would be VERY useful to know!